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Loan rejection

What to do when you can't get a loan

Page reading time: 3 minutes

Before you apply for another loan, find out why your application was rejected. You'll be able to make small changes to help get your next application approved.

If you're finding it hard to borrow money because of your debts, talk to a financial counsellor. It's free and they can help you to get your finances back on track.

Understand why your loan application was rejected

Knowing why your application was rejected will help you to improve your next application.

Lenders have to lend money responsibly. They can't lend you money if they think that you won't be able to make the repayments. They also have to tell you if they reject your application because of your credit report.

A lender may reject your loan application for one of these reasons:

Improve your next loan application

Applying for a few loans over a short period of time can look bad on your credit report. Follow our steps to help get your credit score back on track and improve your chances of getting approved.

1. Get a copy of your credit report

Check that your credit report has no mistakes and that all the debts listed are yours. Get the credit reporter to fix any wrong listings so these don't lower your credit score.

2. Pay off some debts

Keep up with your loan repayments, and make extra repayments where you can. You'll pay off your debts faster and save on interest. See get debt under control to know which debts to start with.

3. Consolidate your debt with a lower interest rate

See if consolidating and refinancing debts can help to reduce your interest payments.

4. Create a budget

Credit providers look at your income, expenses and savings to see whether you can keep up with loan repayments. Start a budget to see what you're spending and where there's room to save. If you grow your savings, it'll be easier to take out a loan and keep up with the repayments.

Having a guarantor may help you to get approved for a loan. But it can be risky for family or friends who go guarantor on the loan and can affect their financial situation.

Other options for getting a loan

There are services and community organisations that can help if you need a loan.

Apply for a low interest loan

You can apply for a no interest loan if you're on a low income and need money for essentials, like a fridge.

Advanced Centrelink payment

If you receive Centrelink payments, you may be able to get an advance payment. This can help you to cover an unexpected cost in the short term without interest or fees.

Get urgent money help

If you're in a crisis situation or struggling to pay for everyday expenses like food or accommodation, get urgent help with money.

Woman sitting on a stool, smiling.

Alisha's car loan

Alisha wanted to buy a used car, so she applied for a $10,000 personal loan at her bank. Her job in retail paid enough to cover her rent, bills and the loan repayments.

But the bank rejected her application, because she had no savings and a $2,000 credit card debt.

Alisha decided to pay off her credit card and build up some savings before applying for another loan.

She started a budget and tracked how much she was spending. She cancelled her unused gym membership and online subscriptions, and cut down on eating out. By making these changes, she saved $200 a week.

She used the $200 to make extra repayments on her credit card debt. When her credit card was paid off, she had more money to put towards her savings goal. These changes helped Alisha get her next application approved.